-------------------------------------------------------------------------------

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                      -----------------------------------
                                   FORM 10-Q

          X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         ---
                        SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2009

                                      OR

             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         ---
                        SECURITIES EXCHANGE ACT OF 1934

               For the Transition Period from           to
                                              ---------    ---------

                       COMMISSION FILE NUMBER:  1-15135

                             CHANDLER (U.S.A.), INC.
             (Exact name of registrant as specified in its charter)

             OKLAHOMA                             73-1325906
  (State or other jurisdiction of    (I.R.S. Employer Identification No.)
   incorporation or organization)

                  1010 MANVEL AVENUE, CHANDLER, OKLAHOMA 74834
              (Address of principal executive offices and zip code)

    Registrant's telephone number, including area code:  (405) 258-0804

   Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.  YES  X   NO
                                                    ---     ---

   Indicate by check mark whether the registrant has submitted electronically
and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T
during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files).  YES     NO
                                                  ---    ---

   Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer  	                     Accelerated filer
                         --                                           --
Non-accelerated filer  X  (Do not check if a smaller reporting company)
                       --
   Smaller reporting company
                              --

   Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).  YES      NO  X
                                         ---     ---

   	The number of common shares, $1.00 par value, of the registrant outstanding
on April 30, 2009 was 2,484, which are owned by Chandler Insurance Company, Ltd.

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<PAGE>
                                                                      Page i

                            CHANDLER (U.S.A.), INC.

                                     INDEX
                                     -----

PART I - FINANCIAL INFORMATION
------------------------------

ITEM 1.    FINANCIAL STATEMENTS:
--------------------------------
    Consolidated Balance Sheets as of March 31, 2009 (unaudited)
      and December 31, 2008 ..................................................1

    Consolidated Statements of Operations for the three months
      ended March 31, 2009 and 2008 (unaudited) ..............................2

    Consolidated Statements of Comprehensive Income for the three
      months ended March 31, 2009 and 2008 (unaudited) .......................3

    Consolidated Statements of Cash Flows for the three months
      ended March 31, 2009 and 2008 (unaudited) ..............................4

    Notes to Interim Consolidated Financial Statements (unaudited) ...........5

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
--------------------------------------------------------------------------
           RESULTS OF OPERATIONS ............................................10
           ---------------------

ITEM 4T. CONTROLS AND PROCEDURES ............................................15
--------------------------------

PART II - OTHER INFORMATION
---------------------------
Item 1.    Legal Proceedings ................................................15

Item 1A.   Risk Factors .....................................................15

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds ......15

Item 3.    Defaults Upon Senior Securities ..................................15

Item 4.    Submission of Matters to a Vote of Security Holders ..............15

Item 5.    Other Information ................................................15

Item 6.    Exhibits .........................................................15

Signatures ..................................................................16

<PAGE>
                                                                      PAGE 1

                           CHANDLER (U.S.A.), INC.
                         CONSOLIDATED BALANCE SHEETS
                 (Amounts in thousands except share amounts)

<TABLE>
<CAPTION>
                                                                                          March 31,   December 31,
                                                                                            2009          2008
                                                                                        ------------  ------------
                                                                                         (Unaudited)
<S>                                                                                     <C>           <C>
ASSETS
Investments
 Fixed maturities available for sale, at fair value
  Restricted (amortized cost $39,264 and $34,243 in 2009 and 2008, respectively) ...... $    40,195   $    35,397
  Unrestricted (amortized cost $44,044 and $40,771 in 2009 and 2008, respectively) ....      44,541        41,699
 Equity securities available for sale, at fair value (cost $0 in 2009 and 2008) .......          76            76
 Short-term investments at fair value (amortized cost $4,996 and $5,853
  in 2009 and 2008, respectively) .....................................................       5,002         5,865
                                                                                        ------------  ------------

Total investments ....................................................................       89,814        83,037
Cash and cash equivalents ($421 and $118 restricted in 2009 and 2008, respectively) ..       16,498        20,636
Accrued investment income ............................................................          931         1,018
Premiums receivable, less allowance for non-collection
 of $157 and $138 at 2009 and 2008, respectively .....................................       24,295        26,405
Reinsurance recoverable on paid losses ...............................................          319           423
Reinsurance recoverable on unpaid losses, less allowance for non-collection
 of $310 and $231 at 2009 and 2008, respectively .....................................       34,391        32,492
Reinsurance recoverable on unpaid losses from related parties ........................       20,124        19,899
Prepaid reinsurance premiums .........................................................        3,088         2,882
Prepaid reinsurance premiums to related parties ......................................       12,539        12,203
Deferred policy acquisition costs ....................................................        1,393         1,304
Property and equipment, net ..........................................................        7,680         7,849
Amounts due from related parties .....................................................       12,031        11,869
State insurance licenses, net ........................................................        3,745         3,745
Other assets .........................................................................       10,690        10,885
                                                                                        ------------  ------------
Total assets .........................................................................  $   237,538   $   234,647
                                                                                        ============  ============

LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities
 Unpaid losses and loss adjustment expenses ..........................................  $   104,037   $   101,459
 Unearned premiums ...................................................................       45,041        43,725
 Policyholder deposits ...............................................................        6,952         7,820
 Accrued taxes and other payables ....................................................        5,657         6,017
 Premiums payable ....................................................................        1,990         2,440
 Premiums payable to related parties .................................................          263           222
 Debentures ..........................................................................        6,979         6,979
 Junior subordinated debentures issued to affiliated trusts ..........................       20,620        20,620
                                                                                        ------------  ------------
  Total liabilities ..................................................................      191,539       189,282
                                                                                        ------------  ------------

Shareholder's equity

 Common stock, $1.00 par value, 50,000 shares authorized;
  2,484 shares issued and outstanding ................................................            2             2
 Paid-in surplus .....................................................................       60,584        60,584
 Accumulated deficit .................................................................      (15,583)      (16,654)
 Accumulated other comprehensive income:
  Unrealized gain on investments available for sale, net of deferred income taxes ....          996         1,433
                                                                                        ------------  ------------
  Total shareholder's equity .........................................................       45,999        45,365
                                                                                        ------------  ------------
Total liabilities and shareholder's equity ...........................................  $   237,538   $   234,647
                                                                                        ============  ============
</TABLE>

See accompanying Notes to Interim Consolidated Financial Statements.

<PAGE>

                                                                      PAGE 2
                            CHANDLER (U.S.A.), INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                             (Amounts in thousands)

<TABLE>
<CAPTION>

                                                                    Three months ended March 31,
                                                                  --------------------------------
                                                                       2009               2008
                                                                  -------------      -------------
<S>                                                               <C>                <C>
Premiums and other revenues
  Direct premiums written and assumed ........................... $     24,854        $    30,203
  Reinsurance premiums ceded ....................................       (2,542)            (2,724)
  Reinsurance premiums ceded to related parties .................       (6,670)            (8,205)
                                                                  -------------      -------------
    Net premiums written and assumed ............................       15,642             19,274
  Increase in unearned premiums .................................         (773)            (1,764)
                                                                  -------------      -------------

    Net premiums earned .........................................       14,869             17,510

Interest income, net ............................................          761                890
Interest income, net from related parties .......................          106                188
Realized investment gains, net ..................................          384                  -
Other income ....................................................          443                412
                                                                  -------------      -------------

    Total premiums and other revenues ...........................       16,563             19,000
                                                                  -------------      -------------

Operating costs and expenses
  Losses and loss adjustment expenses, net of amounts
    ceded to related parties of $3,525 and $4,055 in
    2009 and 2008, respectively .................................        8,262             10,936
  Policy acquisition costs, net of ceding commissions
    received from related parties of $2,536 and $3,120 in
    2009 and 2008, respectively .................................        2,916              3,243
  General and administrative expenses ...........................        3,105              3,160
  Interest expense ..............................................          598                652
                                                                  -------------      -------------
    Total operating costs and expenses ..........................       14,881             17,991
                                                                  -------------      -------------

Income before income taxes ......................................        1,682              1,009
Federal income tax provision ....................................         (611)              (393)
                                                                  -------------      -------------

  Net income .................................................... $      1,071       $        616
                                                                  =============      =============

</TABLE>

See accompanying Notes to Interim Consolidated Financial Statements.

<PAGE>
                                                                     PAGE 3


                             CHANDLER (U.S.A.), INC.
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                    (Unaudited)
                              (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                  Three months ended March 31,
                                                                --------------------------------
                                                                    2009                2008
                                                                -------------       ------------
<S>                                                             <C>                 <C>
Net income ...................................................  $      1,071        $       616
                                                                -------------       ------------
Other comprehensive income (loss), before income tax:
  Unrealized gains (losses) on securities:
    Unrealized holding gains (losses) arising during period ..          (278)             1,268
    Less:  Reclassification adjustment for gains included
      in net income ..........................................          (384)                 -
                                                                -------------       ------------

Other comprehensive income (loss), before income tax .........          (662)             1,268

Income tax benefit (provision) related to items of other
  comprehensive income (loss) ................................           225               (431)
                                                                -------------       ------------
Other comprehensive income (loss), net of income tax .........          (437)               837
                                                                -------------       ------------
Comprehensive income .........................................  $        634        $     1,453
                                                                =============       ============

</TABLE>

See accompanying Notes to Interim Consolidated Financial Statements.

<PAGE>
                                                                     PAGE 4

                             CHANDLER (U.S.A.), INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                               Three months ended March 31,
                                                                              ------------------------------
                                                                                  2009              2008
                                                                              ------------      ------------
<S>                                                                           <C>               <C>
OPERATING ACTIVITIES
Net income .................................................................. $     1,071       $       616
 Add (deduct):
 Adjustments to reconcile net income to cash provided by
    operating activities:
    Realized investment gains, net ..........................................        (384)                -
    Net (gains) losses on sale of property and equipment ....................           6                (2)
    Amortization and depreciation expense ...................................         393               364
    Provision for non-collection of premiums ................................          15                15
    Provision for non-collection of reinsurance recoverables ................         112               127
    Provision for impairment of investment ..................................          10                 -
    Net change in non-cash balances relating to operating activities:
      Accrued investment income .............................................          87                43
      Premiums receivable ...................................................       2,095            (2,704)
      Reinsurance recoverable on paid losses ................................          71               (10)
      Reinsurance recoverable on unpaid losses ..............................      (1,978)           (1,559)
      Reinsurance recoverable on unpaid losses from related parties .........        (225)             (969)
      Prepaid reinsurance premiums ..........................................        (206)             (321)
      Prepaid reinsurance premiums to related parties .......................        (336)             (756)
      Deferred policy acquisition costs .....................................         (89)             (162)
      Other assets ..........................................................         396               749
      Unpaid losses and loss adjustment expenses ............................       2,578             5,141
      Unearned premiums .....................................................       1,316             2,841
      Policyholder deposits .................................................        (868)             (820)
      Accrued taxes and other payables ......................................        (360)              265
      Premiums payable ......................................................        (450)             (185)
      Premiums payable to related parties ...................................          41               603
                                                                              ------------      ------------
    Cash provided by operating activities ...................................       3,295             3,276
                                                                              ------------      ------------

INVESTING ACTIVITIES
  Short-term investments:
    Purchases ...............................................................         (95)             (285)
    Maturities ..............................................................         950               380
  Unrestricted fixed maturities available for sale:
    Purchases ...............................................................     (16,402)           (8,507)
    Sales ...................................................................       6,616                 -
    Maturities ..............................................................       1,715             1,250
  Cost of property and equipment purchased ..................................         (71)             (129)
  Proceeds from sale of property and equipment ..............................          16                33
                                                                              ------------      ------------
    Cash applied to investing activities ....................................      (7,271)           (7,258)
                                                                              ------------      ------------

FINANCING ACTIVITIES
  Payments and loans from related parties ...................................         403               493
  Payments and loans to related parties .....................................        (565)             (174)
                                                                              ------------      ------------
    Cash provided by (applied to) investing activities ......................        (162)              319
                                                                              ------------      ------------
Decrease in cash and cash equivalents during the period .....................      (4,138)           (3,663)
Cash and cash equivalents at beginning of period ............................      20,636            32,956
                                                                              ------------      ------------
Cash and cash equivalents at end of period .................................. $    16,498       $    29,293
                                                                              ============      ============

</TABLE>

See accompanying Notes to Interim Consolidated Financial Statements.


<PAGE>
                                                                     PAGE 5


                             CHANDLER (U.S.A.), INC.
               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                   THREE MONTHS ENDED MARCH 31, 2009 AND 2008
                                   (Unaudited)

NOTE 1.  BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements of Chandler
(U.S.A.), Inc. ("Chandler USA") have been prepared in accordance with
accounting principles generally accepted in the United States of America
("GAAP") for interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X.  They do not include all information
and footnotes required by GAAP for complete financial statements.  However,
except as disclosed herein, there have been no material changes in the
information included in Chandler USA's Annual Report on Form 10-K for the year
ended December 31, 2008.  In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included.  The results of operations for the three
month period ended March 31, 2009 are not necessarily indicative of the
results that may be expected for the year.

     The consolidated financial statements include the accounts of Chandler
USA and all wholly owned subsidiaries that meet consolidation requirements
including National American Insurance Company ("NAICO") and Chandler Insurance
Managers, Inc. ("CIMI").

NOTE 2.  SEGMENT INFORMATION

     Chandler USA has two reportable operating segments:  property and casualty
insurance and agency.  The segments are managed separately due to the
differences in the nature of the insurance products and services sold.  The
following table presents a summary of Chandler USA's operating segments for
the three month periods ended March 31, 2009 and 2008:

<TABLE>
<CAPTION>
                                          Property
                                            and
                                          casualty                   Intersegment    Reported
                                          insurance       Agency     eliminations    balances
                                         ------------  ------------  ------------  ------------
                                                             (In thousands)
<S>                                      <C>           <C>           <C>           <C>
THREE MONTHS ENDED MARCH 31, 2009
Revenues from external customers (1) ... $    15,014   $       298   $         -   $    15,312
Intersegment revenues ..................          29           803          (832)            -
Segment profit before income taxes (2)..       1,444           238             -         1,682
Segment assets .........................     236,678         8,690        (7,830)      237,538

THREE MONTHS ENDED MARCH 31, 2008
Revenues from external customers (1) ... $    17,596   $       326   $         -   $    17,922
Intersegment revenues ..................          11           996        (1,007)            -
Segment profit before income taxes (2)..         506           503             -         1,009
Segment assets .........................     242,201         8,375        (6,911)      243,665

------------------------------------------

<FN>

(1)  Consists of net premiums earned and other income.
(2)  Includes net realized investment gains.

</TABLE>

     Net premiums earned and losses and loss adjustment expenses within the
property and casualty insurance segment can be identified to Chandler USA
designated insurance programs and to each line of insurance.  Chandler USA's
chief operating decision makers review net premiums earned and losses and loss
adjustment expenses in assessing the performance of the insurance programs and
lines of business.  In addition, Chandler USA's chief operating decision
makers consider many other factors such as the lines of business offered
within each insurance program and the states in which the insurance programs
are offered.  Certain discrete financial information is not readily available
by insurance programs or lines of insurance, including assets, interest income,
and investment gains or losses, allocated to each insurance program or line of
insurance.  Chandler USA does not consider its insurance programs or lines of
insurance to be reportable segments, however, the following supplemental
information pertaining to net premiums earned and losses and loss adjustment
expenses is presented by insurance program and line of insurance for the
property and casualty insurance segment.

<PAGE>
                                                                     PAGE 6

<TABLE>
<CAPTION>
                                             THREE MONTHS ENDED MARCH 31,
                                           --------------------------------
                                               2009                2008
                                           ------------        ------------
                                                    (In thousands)
<S>                                        <C>                 <C>
INSURANCE PROGRAM:
-----------------------------------------
  NET PREMIUMS EARNED
  Standard lines ........................  $    14,172         $    16,736
  Political subdivisions ................          644                 700
  Other .................................           53                  74
                                           ------------        ------------
  TOTAL .................................  $    14,869         $    17,510
                                           ============        ============

  LOSSES AND LOSS ADJUSTMENT EXPENSES
  Standard lines ........................  $     7,702         $    10,429
  Political subdivisions ................          409                 436
  Other .................................          151                  71
                                           ------------        ------------
  TOTAL .................................  $     8,262         $    10,936
                                           ============        ============

                                             THREE MONTHS ENDED MARCH 31,
                                           --------------------------------
                                               2009                2008
                                           ------------        ------------
                                                    (In thousands)
<S>                                        <C>                 <C>
LINES OF INSURANCE:
-----------------------------------------
  NET PREMIUMS EARNED
  Automobile liability ..................  $     4,750         $     6,764
  Workers compensation ..................        5,130               5,371
  Other liability .......................        3,364               4,055
  Automobile physical damage ............        1,603               1,248
  Other .................................           22                  72
                                           ------------        ------------
  TOTAL .................................  $    14,869         $    17,510
                                           ============        ============

  LOSSES AND LOSS ADJUSTMENT EXPENSES
  Automobile liability ..................  $     3,774         $     5,149
  Workers compensation ..................        2,408               3,503
  Other liability .......................        1,406               1,547
  Automobile physical damage ............          676                 715
  Other .................................           (2)                 22
                                           ------------        ------------
  TOTAL .................................  $     8,262         $    10,936
                                           ============        ============

</TABLE>

NOTE 3.  COMMITMENTS AND CONTINGENCIES

     During March 2001, Chandler USA entered into a $3.8 million sale and
leaseback transaction for certain owned equipment for three years.  During
March 2004, the lease was extended for three years and during March 2007, the
lease was extended for an additional three years with monthly rental
installments equal to the sum of (i) $13,834 plus (ii) interest on the unpaid
lease balance at 1% over JP Morgan Chase Bank prime which was 4.25% at March
31, 2009.  Chandler USA has the option to repurchase the equipment at the end
of the lease for approximately $1.9 million (the "Balloon Payment"), or may
elect to have the lessor sell the equipment.  If the election to sell the
equipment is made, Chandler USA would retain any proceeds exceeding the
Balloon Payment.  If the proceeds were less than the Balloon Payment, Chandler
USA would be required to pay the difference between the proceeds and the
Balloon Payment, not to exceed approximately $1.5 million.

     Chandler USA has guaranteed the obligations of Chandler Capital Trust I
and Chandler Capital Trust II (the "Capital Trusts") with respect to the trust
preferred securities they have outstanding.  The Capital Trusts distribute the
interest received from Chandler USA on the junior subordinated debentures to
the holders of the trust preferred securities to fulfill their obligations
with respect to such securities.  The Capital Trusts are wholly owned non-
consolidated subsidiaries of Chandler USA.  Chandler USA guarantees payment of
distributions and the redemption price of the trust preferred securities until
the securities are redeemed in full.  The total redemption price of the trust
preferred securities is $20.0 million.

<PAGE>
                                                                     PAGE 7

NOTE 4. LITIGATION

     In October 1999, NAICO provided surety bonds for Gulsby Engineering, Inc.
("Gulsby") in connection with contracts between Gulf Liquids New River
Project, LLC ("Gulf Liquids") and Gulsby for the construction of two gas
processing plants in Louisiana. During 2001, Gulsby became unable to pay
various vendors resulting in payments to vendors by NAICO totaling $20,182,499.
In August 2001, NAICO filed suit in federal court in Louisiana alleging that
Gulf Liquids had breached its obligations under the bonds by materially
altering certain contracts and that, as a result, NAICO was exonerated on the
bonds and should recover the amounts paid to vendors. In the fall of 2001,
Gulsby and Bay Limited, another contractor with whom Gulsby had entered into a
joint venture for the construction of other gas processing plants for Gulf
Liquids, filed lawsuits relating to those plants in Houston, Texas. Gulf
Liquids filed original actions and counterclaims. NAICO intervened in the
Texas lawsuits and, in addition, sued Williams Energy Marketing and Trading
(which later became Williams Power Company, Inc.) ("Williams") alleging fraud,
breach of contract, tortious interference with contractual relations,
conspiracy and alter ego. These claims were asserted against both Gulf Liquids
and Williams. Gulf Liquids asserted counterclaims alleging breach of contract
against NAICO and requesting contractual and statutory damages ranging from
$40 million to $80 million. The cases were consolidated for trial in the 215th
Judicial District Court in Harris County, Texas.

     The trial in the Harris County cases began in late April 2006, and
concluded August 1, 2006.  The jury found in favor of NAICO, Gulsby, Bay
Limited and the joint venture between Gulsby and Bay Limited ("Gulsby-Bay
Plant Partners") on all counts and fixed damages against Gulf Liquids and
Williams totaling $402,568,089.53. The damages determined by the jury included
a total of $325 million in punitive damages. Among other findings, the jury
found:

1.  Williams tortiously interfered with NAICO's contractual relationship with
    Gulsby and Gulf Liquids; and
2.  Williams fraudulently induced NAICO to issue the surety bonds; and
3.  Williams defrauded NAICO after the bonds were issued; and
4.  Williams' actions were malicious; and
5.  Gulf Liquids fraudulently induced NAICO to issue the surety bonds; and
6.  Gulf Liquids breached its obligations to NAICO under the bonds; and
7.  Williams is responsible for the claims against Gulf Liquids because Gulf
    Liquids is the alter ego of Williams; and
8.  There were material alterations (cardinal changes) to the contracts NAICO
    bonded.

     The amounts the jury found owing to NAICO included $20,182,499 in actual
damages, against both Gulf Liquids and Williams, $20 million in punitive
damages against Gulf Liquids, and $50 million in punitive damages against
Williams. The verdicts in favor of Gulsby included $20,941,436 in actual
damages against both Gulf Liquids and Williams, $25 million in punitive damages
against Gulf Liquids and $60 million in punitive damages against Williams.

     NAICO is subrogated to any recovery by Gulsby to the extent of NAICO's
losses on the bonds including loss adjustment expenses with interest from the
date the losses and loss expenses were paid.

     A significant amount of NAICO's losses on the surety bonds were ceded to
various reinsurers and NAICO will be required to reimburse these reinsurers
in accordance with the agreements between NAICO and the reinsurers.

     During the third quarter of 2006, NAICO increased the estimated recovery
on the surety bond claims related to the construction of the two gas processing
plants which resulted in a decrease in losses and loss adjustment expenses
incurred of $4.7 million.  Unpaid losses and loss adjustment expenses decreased
$22.7 million, reinsurance recoverable on unpaid losses and loss adjustment
expenses decreased $16.8 million, and reinsurance recoverable on paid losses
and loss adjustment expenses decreased $1.2 million as of December 31, 2006 as
a result of increasing the estimated recovery.  NAICO also recorded $6.6
million of interest income for its estimate of prejudgment interest through
December 31, 2006, including a recovery for a pre-verdict settlement with
certain other parties.

     On January 28, 2008, the court entered a final judgment denying Gulf
Liquid's claims against NAICO and Gulsby, denying all of NAICO's claims
against Gulf Liquids and Williams, and entering judgment for Gulsby against
Gulf Liquids for $15,651,927 plus interest at 7.25% compounded annually from
January 28, 2008 until paid.  The court also ordered Gulf Liquids to pay
Gulsby's taxable court costs, estimated at $100,000.  Gulf Liquids has
appealed the judgment entered in favor of Gulsby.  NAICO has appealed the
trial court's denial of its claims against Gulf Liquids and Williams and
seeks entry of judgment upon the jury verdicts for the amounts the jury found
should be awarded to NAICO.  Gulsby has also appealed the trial court's final
judgment, contending that judgment should be entered in its favor against
Gulf Liquids and Williams in accordance with the jury verdicts.

<PAGE>
                                                                     PAGE 8

     In the fourth quarter of 2007, as a result of this final judgment, NAICO
decreased the estimated recovery on the surety bond claims related to the
construction of the two gas processing plants which resulted in an increase in
losses and loss adjustment expenses incurred of $1.8 million.  Unpaid losses
and loss adjustment expenses increased $12.7 million and reinsurance
recoverable on unpaid losses and loss adjustment expenses increased $10.9
million as of December 31, 2007 as a result of decreasing the estimated
recovery.  NAICO also decreased accrued interest income by $4.5 million for
its estimate of prejudgment interest income.

NOTE 5.  NEW ACCOUNTING STANDARDS

     The Financial Accounting Standards Board ("FASB") periodically issues new
accounting standards in a continuing effort to improve standards of financial
accounting and reporting.  Chandler USA has reviewed the recently issued
pronouncements and concluded that the following new accounting standards are
applicable to Chandler USA.

     In March 2008, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 161, "Disclosures about Derivative Instruments and Hedging
Activities - an amendment of FASB Statement No. 133."  SFAS No. 161 changes
the disclosure requirements for derivative instruments and hedging activities.
Entities are required to provide enhanced disclosures about (a) how and why an
entity uses derivative instruments, (b) how derivative instruments and related
hedged items are accounted for under SFAS No. 133 and its related
interpretations, and (c) how derivative instruments and related hedged items
affect an entity's financial position, financial performance and cash flows.
Chandler USA has adopted SFAS No. 161 as of January 1, 2009.  The adoption of
SFAS No. 161 did not have a material impact on its consolidated financial
statements.

     In May 2008, the FASB issued SFAS No. 163, "Accounting for Financial
Guarantee Insurance Contracts - an interpretation of FASB Statement No. 60."
SFAS No. 163 requires that an insurance enterprise recognize a claim liability
prior to an event of default when there is evidence that credit deterioration
has occurred in an insured financial obligation.  It also clarifies how
Statement 60 applies to financial guarantee insurance contracts, including
the recognition and measurement to be used to account for premium revenue and
claim liabilities, and requires expanded disclosures about financial guarantee
insurance contracts.  Chandler USA does not issue financial guarantee insurance
contracts.  Chandler USA has adopted the SFAS No. 163 as of January 1, 2009.
The adoption of SFAS No. 163 did not have any impact on its consolidated
financial statements.

     In April 2009, the FASB issued FASB Staff Position ("FSP") No. FAS 107-1
and APB 28-1, "Interim Disclosures about Fair Value of Financial Instruments".
FSP No. FAS 107-1 and APB 28-1 expands existing disclosures regarding fair
value of financial instruments required in annual reports to interim periods.
The disclosures required by FSP No. FAS 107-1 and APB 28-1 are effective for
interim reporting periods ending after June 15, 2009.  Chandler USA will
adopt FSP No. 107-1 and APB 28-1 on June 30, 2009.  Chandler USA does not
expect the adoption of FSP No. FAS 107-1 and APB 28-1 to have a material
impact on its consolidated financial statements.

     In April 2009, the FASB issued FSP No. FAS 157-4, "Determining Fair Value
When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly".
FSP No. FAS 157-4 provides additional guidance for estimating fair value in
accordance with SFAS No. 157 when the volume and level of activity for the
asset or liability have significantly decreased.  FSP No. FAS 157-4 is
effective prospectively for interim and annual reporting periods ending
after June 15, 2009.  Chandler USA will adopt FSP No. FAS 157-4 on June 30,
2009.  Chandler USA does not expect the adoption of FSP No. FAS 157-4 to
have a material impact on its consolidated financial statements.

     In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2,
"Recognition and Presentation of Other-Than-Temporary Impairments".  FSP
No. FAS 115-2 and FAS 124-2 amends other-than-temporary impairment guidance
in GAAP for debt securities to make the guidance more operational and to
improve the presentation and disclosure of other-than-temporary impairments
on debt and equity securities in the financial statements.  FSP No. FAS
115-2 and FAS 124-2 are effective for interim and annual reporting periods
ending after June 15, 2009.  Chandler USA will adopt FSP No. FAS 115-2 and
FAS 124-2 on June 30, 2009.  Chandler USA does not expect the adoption of
FSP No. FAS 115-2 and FAS 124-2 to have a material impact on its
consolidated financial statements.

<PAGE>
                                                                     PAGE 9

NOTE 6.  FAIR VALUE MEASUREMENTS

     Effective January 1, 2008, Chandler USA adopted SFAS No. 157 which
establishes a framework for measuring fair value and requires specific
disclosures regarding assets and liabilities that are measured at fair value.
SFAS No. 157 defines fair value as the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.  SFAS No. 157 ranks the quality
and reliability of the information used to determine fair values into three
broad categories, with the highest priority given to Level 1 inputs and the
lowest priority to Level 3 inputs.  These levels are defined by SFAS No. 157
as follows:

     Level 1 - Quoted prices (unadjusted) in active markets for identical
     assets or liabilities that the reporting entity has the ability to
     access at the measurement date.

     Level 2 - Observable inputs other than quoted prices included within
     Level 1 for the asset or liability, either directly or indirectly.  If
     an asset or liability has a specified term, a Level 2 input must be
     observable for substantially the full term of the asset or liability.

     Level 3 - Unobservable inputs for the asset or liability.

     The following table presents information about Chandler USA's assets
measured at fair value on a recurring basis as of March 31, 2009, and
indicates the fair value hierarchy of the valuation techniques utilized to
determine such values.  Substantially all of the prices of fixed maturities,
equity securities and short-term investments that are valued as Level 1 or
Level 2 in the fair value hierarchy are received from independent pricing
services utilized by our investment custodians.  No liabilities were measured
at fair value at March 31, 2009.

<TABLE>
<CAPTION>

                                                           Fair value measurements at March 31, 2009
                                            ----------------------------------------------------------------------
                                              Quoted prices      Significant
                                                in active          other         Significant
                                              markets for        observable     unobservable
                                            identical assets       inputs          inputs             Total
   Description                                   (Level 1)        (Level 2)       (Level 3)         fair value
------------------------------------------  ----------------  ----------------  ----------------  ----------------
                                                                        (In thousands)
<S>                                         <C>               <C>               <C>               <C>
   Fixed maturities available for sale ...  $             -   $        84,736   $             -   $        84,736
   Equity securities available for sale ..                -                 -                76                76
   Short-term investments ................                -             5,002                 -             5,002
                                            ----------------  ----------------  ----------------  ----------------
   Total .................................  $             -   $        89,738   $            76   $        89,814
                                            ================  ================  ================  ================

</TABLE>

     Prices for fixed maturities available for sale and short-term investments
were provided by various custodians that hold such assets on behalf of Chandler
USA.  The custodians utilize independent pricing services to determine prices
for these assets.  Management reviews the prices provided but does not conduct
an independent validation of the prices.  Any fixed maturities that are not
held by a custodian are priced using non-binding broker quotations.  Total
assets priced from broker quotations totaled $386,000 at March 31, 2009, or
0.4% of total Level 2 assets.

     At March 31, 2009, Chandler USA's equity securities which were measured
at fair value using Level 3 inputs consisted of common stock received in
connection with an unaffiliated entity's conversion to a for-profit
corporation.  The fair value of this stock was based upon an analytically
determined valuation from an independent rating organization.  The following
table presents additional information about assets measured at fair value
using Level 3 inputs for the quarter ended March 31, 2009.

<TABLE>
<CAPTION>
     Fair value measurements using significant         Quarter ended
     unobservable inputs (Level 3)                     March 31, 2009
   -------------------------------------------------  ----------------
                                                       (In thousands)
   <S>                                                <C>
     Beginning balance .............................  $            76
       Total realized and unrealized gains (losses):
         Included in earnings ......................                -
         Included in other comprehensive income ....                -
       Purchases, issuances and settlements ........                -
       Transfers in and/or out of Level 3 ..........                -
                                                      ----------------
     Ending balance ................................  $            76
                                                      ================

</TABLE>

<PAGE>
                                                                     PAGE 10

ITEM 2.              MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

     Some of the statements made in this Form 10-Q report, as well as
statements made by Chandler (U.S.A.), Inc. ("Chandler USA") in periodic press
releases and oral statements made by Chandler USA's officials constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995.  Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of Chandler USA to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements.  Such factors include, among other
things, (i) general economic and business conditions; (ii) interest rate
changes; (iii) competition and regulatory environment in which Chandler USA
and its subsidiaries operate, including the ability to implement price
increases; (iv) claims frequency; (v) claims severity: (vi) catastrophic
events of unanticipated frequency or severity; (vii) the number of new and
renewal policy applications submitted to National American Insurance Company
("NAICO") by its agents; (viii) the ability of NAICO to obtain adequate
reinsurance in amounts and at rates that will not adversely affect its
competitive position; (ix) the ability of NAICO to collect reinsurance
recoverables; (x) the ability of NAICO to maintain favorable insurance company
ratings; and (xi) various other factors including ongoing litigation matters.

RESULTS OF OPERATIONS

PREMIUMS EARNED

     The following table sets forth premiums earned on a gross basis (before
reductions for premiums ceded to reinsurers) and on a net basis (after such
reductions) for each insurance program as well as each line of insurance for
the three month periods ended March 31, 2009 and 2008:

<TABLE>
<CAPTION>

                                         GROSS PREMIUMS EARNED          NET PREMIUMS EARNED
                                      ---------------------------   ---------------------------
   THREE MONTHS ENDED MARCH 31,           2009           2008           2009           2008
   ---------------------------------- ------------   ------------   ------------   ------------
                                                            (In thousands)
   <S>                                <C>            <C>            <C>            <C>
   INSURANCE PROGRAMS:
   Standard lines ................... $    22,492    $    26,208    $    14,172    $    16,736
   Political subdivisions ...........         987          1,066            644            700
   Other ............................          60             88             53             74
                                      ------------   ------------   ------------   ------------
   TOTAL ............................ $    23,539    $    27,362    $    14,869    $    17,510
                                      ============   ============   ============   ============

   LINES OF INSURANCE:
   Automobile liability ............. $     6,899    $     9,721    $     4,750    $     6,764
   Workers compensation .............       7,843          8,250          5,130          5,371
   Other liability ..................       6,401          7,458          3,364          4,055
   Automobile physical damage .......       2,363          1,832          1,603          1,248
   Other ............................          33            101             22             72
                                      ------------   ------------   ------------   ------------
   TOTAL ............................ $    23,539    $    27,362    $    14,869    $    17,510
                                      ============   ============   ============   ============

</TABLE>

     Gross premiums earned in the first quarter of 2009 decreased $3.8 million
 or 14% compared to the first quarter of 2008.  Net premiums earned decreased
$2.6 million or 15% in the first quarter of 2009 compared to the first quarter
of 2008.

     Gross premiums earned in the standard lines program decreased $3.7 million
or 14% in the first quarter of 2009 compared to the first quarter of 2008.
Gross premiums earned from trucking accounts in this program decreased $2.6
million in the first quarter of 2009.  Gross premiums earned for automobile
liability decreased $2.8 million in the first quarter of 2009, and other
liability and workers compensation gross premiums earned decreased $1.1 million
and $407,000 in the 2009 quarter, respectively.  Gross premiums earned for
automobile physical damage increased $531,000 in the first quarter of 2009.
Net premiums earned decreased $2.6 million or 15% in the first quarter of 2009
versus the first quarter of 2008, due to the decrease in gross earned premiums.

<PAGE>
                                                                     PAGE 11

     Gross premiums earned in the political subdivisions program decreased
$79,000 or 7% in the first quarter of 2009 compared to the first quarter of
2008.  Net premiums earned in the political subdivisions program decreased
$56,000 or 8% in the first quarter of 2009 versus the first quarter of 2008.

NET INVESTMENT INCOME AND NET REALIZED INVESTMENT GAINS

     At March 31, 2009, Chandler USA's investment portfolio consisted primarily
of fixed income U.S. Treasury and government agency bonds, high-quality
corporate and tax exempt bonds and certificates of deposit insured by the
FDIC, with approximately 16% invested in cash and money market instruments.
Income generated from this portfolio is largely dependent upon prevailing
levels of interest rates.  Chandler USA's portfolio contains no non-investment
grade bonds or real estate investments.  Chandler USA also receives interest
income from related parties on intercompany loans.

     Net investment income, excluding interest income from related parties
decreased $129,000 or 14% in the first quarter of 2009 versus the first quarter
of 2008 due primarily to lower interest rates.  Cash and invested assets were
$106.3 million at March 31, 2009 compared to $103.7 million at December 31,
2008 and $101.8 million at March 31, 2008.  Net interest income from related
parties was $106,000 in the first quarter of 2009 compared to $188,000 in the
first quarter of 2008.  The decrease in the 2009 quarter was due to lower
interest rates.

     Net realized investment gains were $384,000 in the first quarter of 2009.
The realized gains resulted from sales of fixed maturities available for sale
in the amount of $6.6 million.  There were no net realized investment gains in
the first quarter of 2008.

OTHER INCOME

     Other income was $443,000 in the first quarter of 2009 and increased
$31,000 or 8% compared to the first quarter of 2008.

LOSSES AND LOSS ADJUSTMENT EXPENSES

     Chandler USA estimates losses and loss adjustment expenses based on
historical experience and payment and reporting patterns for the type of risk
involved.  These estimates are based on data available at the time of the
estimate and are periodically reviewed by independent professional actuaries.
Although such estimates are management's best estimates of the expected
values, the ultimate liability for unpaid claims may vary from these values.

     The percentage of losses and loss adjustment expenses to net premiums
earned ("loss ratio") was 55.6% for the first quarter of 2009 versus 62.5% in
the first quarter of 2008.  During the first quarter of 2009, NAICO experienced
redundant loss reserve development totaling $330,000 which decreased the 2009
loss ratio by 2.2 percentage points.  The redundant loss reserve development in
the first quarter of 2009 resulted primarily from certain recoveries on claims
in the 1998 and 1999 accident years.  During 2008, loss development was
$181,000 which increased the 2008 loss ratio by 1.0 percentage point.  Weather-
related losses from wind and hail were not significant in the first quarter of
2009 or 2008.

POLICY ACQUISITION COSTS

     Policy acquisition costs consist of costs associated with the acquisition
of new and renewal business and generally include direct costs such as premium
taxes, commissions to agents and ceding companies and premium-related
assessments and indirect costs such as salaries and expenses of personnel who
perform and support underwriting activities.  NAICO also receives ceding
commissions from the reinsurers who assume premiums from NAICO under certain
reinsurance contracts and the ceding commissions are accounted for as a
reduction of policy acquisition costs.  Direct policy acquisition costs and
ceding commissions are deferred and amortized over the terms of the policies.
When the sum of the anticipated losses, loss adjustment expenses and
unamortized policy acquisition costs exceeds the related unearned premiums,
including anticipated investment income, a provision for the indicated
deficiency is recorded.

<PAGE>
                                                                     PAGE 12

     The following table sets forth Chandler USA's policy acquisition costs
for each of the three month periods ended March 31, 2009 and 2008:

<TABLE>
<CAPTION>

                                                    THREE MONTHS ENDED MARCH 31,
                                                    ----------------------------
                                                        2009            2008
                                                    ------------    ------------
                                                           (In thousands)
      <S>                                           <C>             <C>
      Commissions expense ......................... $     3,683     $     4,325
      Other premium related assessments ...........         267             308
      Premium taxes ...............................         455             577
      Excise taxes ................................          67              82
      Other expense ...............................         126             148
                                                    ------------    ------------
      Total direct expenses .......................       4,598           5,440
      Indirect underwriting expenses ..............       1,430           1,575
      Commissions received from reinsurers ........      (3,023)         (3,610)
      Adjustment for deferred acquisition costs ...         (89)           (162)
                                                    ------------    ------------
      Net policy acquisition costs ................ $     2,916     $     3,243
                                                    ============    ============

</TABLE>

     Total gross direct and indirect expenses as a percentage of direct written
and assumed premiums were 24.3% for the first quarter of 2009 versus 23.2% for
the first quarter of 2008 and 24.6% for the year ended December 31, 2008.
Commissions expense as a percentage of gross written and assumed premiums was
14.8% for the first quarter of 2009 versus 14.3% for the first quarter of 2008
and the year ended December 31, 2008.

     Indirect underwriting expenses decreased $145,000 in the first quarter of
2009 compared to the first quarter of 2008, and were 5.8% and 5.2% of total
direct written and assumed premiums in the three month periods ended March 31,
2009 and 2008, respectively.  Indirect expenses were 6.4% of total direct
written and assumed premiums in the year ended December 31, 2008.  Indirect
expenses include general overhead and administrative costs associated with the
acquisition of new and renewal business, some of which is relatively fixed in
nature, thus, the percentage of such expenses to direct written and assumed
premiums will vary depending on Chandler USA's overall premium volume.
Commissions received from reinsurers decreased $587,000 in the first quarter
of 2009 compared to the year-ago quarter due primarily to the decrease in
reinsurance premiums ceded in the 2009 quarter.

GENERAL AND ADMINISTRATIVE EXPENSES

     General and administrative expenses were 12.9% of gross premiums earned
and other income in the first quarter of 2009 versus 11.4% in the 2008 quarter
and 12.7% in the year ended December 31, 2008.  General and administrative
expenses decreased $55,000 or 2% in the first quarter of 2009 compared to the
2008 quarter.  General and administrative expenses have historically not
varied in direct proportion to Chandler USA's revenues.  A portion of such
expenses is allocated to policy acquisition costs (indirect underwriting
expenses) and loss adjustment expenses based on various factors including
employee counts, salaries, occupancy and specific identification.  Because
certain types of expenses are fixed in nature, the percentage of such expenses
to revenues will vary depending on Chandler USA's overall premium volume.

INTEREST EXPENSE

     Interest expense was $598,000 in the first quarter of 2009 compared to
$652,000 in the first quarter of 2008.  Substantially all of Chandler USA's
interest expense is related to its outstanding senior debentures and junior
subordinated debentures.  The decrease in the 2009 period was due primarily
to lower interest rates during 2009, as a portion of Chandler USA's junior
subordinated debentures were issued with a floating interest rate.

<PAGE>
                                                                     PAGE 12

LIQUIDITY AND CAPITAL RESOURCES

     In the first quarter of 2009, Chandler USA provided $3.3 million in cash
from operations.  Unpaid losses and loss adjustment expenses increased $2.6
million, premiums receivable decreased $2.1 million and unearned premiums
increased $1.3 million during the first quarter of 2009.  These were partially
offset by  an increase in reinsurance recoverable on unpaid losses and loss
adjustment expenses of $2.2 million.  In the first quarter of 2008, Chandler
USA provided $3.3 million in cash from operations.  Unpaid losses and loss
adjustment expenses increased $5.1 million and unearned premiums increased
$2.8 million during the first quarter of 2008, but these increases were
partially offset by increases in premiums receivable of $2.7 million,
reinsurance recoverable on unpaid losses of $2.5 million and prepaid
reinsurance premiums of $1.1 million.

     NAICO is required to deposit cash and securities with regulatory agencies
in which it is licensed as a condition of conducting operations in the state.
In addition, NAICO has deposited cash and securities into a trust account as
collateral for a reinsurance agreement in which NAICO is the assuming
reinsurer.  At March 31, 2009, the total amount of cash and securities
restricted as a result of these arrangements was $40.6 million which was an
increase of $5.1 million from December 31, 2008.  This increase was due to
an increase in the amount of reinsurance that NAICO assumed during 2008 and
2009.

     At March 31, 2009, Chandler USA's parent company, Chandler Insurance
Company, Ltd., owed approximately $12.0 million to Chandler USA versus
$11.9 million at December 31, 2008 under an Intercompany Credit Agreement
(the "Credit Agreement") covering intercompany loans between the parties.
The Credit Agreement requires interest to be paid at the prime interest rate
published in The Wall Street Journal each month, and balances owed by either
party are payable at any time upon demand.

     During March 2001, Chandler USA entered into a $3.8 million sale and
leaseback transaction for certain owned equipment for three years.  During
March 2004, the lease was extended for three years and during March 2007,
the lease was extended for an additional three years with monthly rental
installments equal to the sum of (i) $13,834 plus (ii) interest on the unpaid
lease balance at 1% over JP Morgan Chase Bank prime which was 4.25% at March
31, 2009.  Chandler USA has the option to repurchase the equipment at the
end of the lease for approximately $1.9 million (the "Balloon Payment"), or
may elect to have the lessor sell the equipment.  If the election to sell
the equipment is made, Chandler USA would retain any proceeds exceeding the
Balloon Payment.  If the proceeds were less than the Balloon Payment, Chandler
USA would be required to pay the difference between the proceeds and the
Balloon Payment, not to exceed approximately $1.5 million.

     Chandler USA is a holding company receiving cash principally through
borrowings, subsidiary dividends and other payments, subject to various
regulatory restrictions.  The capacity of insurance companies to write
insurance is based on maintaining liquidity and capital resources sufficient
to pay claims and expenses as they become due.  The primary sources of
liquidity for Chandler USA's subsidiaries are funds generated from insurance
premiums, investment income, capital contributions from Chandler USA and
proceeds from sales and maturities of portfolio investments.  The principal
expenditures are payment of losses and loss adjustment expenses, insurance
operating expenses and commissions.

     A significant portion of Chandler USA's consolidated assets represents
assets of NAICO that may not be immediately transferable to Chandler USA in
the form of shareholder dividends, loans, advances or other payments.

     Statutes and regulations governing NAICO and other insurance companies
domiciled in Oklahoma regulate the payment of shareholder dividends and other
payments by NAICO to Chandler USA.  Under applicable Oklahoma statutes and
regulations, NAICO is permitted to pay shareholder dividends only out of
statutory earned surplus.  To the extent NAICO has statutory earned surplus,
NAICO may pay shareholder dividends only to the extent that such dividends
are not defined as extraordinary dividends or distributions.  If the dividends
are, under applicable statutes and regulations, extraordinary dividends or
distributions, regulatory approval must be obtained.  Under the applicable
Oklahoma statute, and subject to the availability of statutory earned surplus,
the maximum shareholder dividend that may be declared (or cash or property
distribution that may be made) by NAICO in any one calendar year without
regulatory approval is the greater of (i) NAICO's statutory net income,
excluding realized capital gains, for the preceding calendar year; or (ii)
10% of NAICO's statutory policyholders' surplus as of the preceding calendar
year end, not to exceed NAICO's statutory earned surplus.

     As of December 31, 2008, NAICO had statutory earned surplus of $13.4
million.  Applying the Oklahoma statutory limits described above, the maximum
shareholder dividend NAICO may pay in 2009 without the approval of the
Oklahoma Department of Insurance is $5.1 million.  NAICO paid cash
shareholder dividends to Chandler USA totaling $500,000 during the first
quarter of 2009.  During 2008, NAICO paid cash shareholder dividends to
Chandler USA totaling $2.1 million.

<PAGE>
                                                                     PAGE 14

     In addition to the statutory limits described above, the amount of
shareholder dividends and other payments to affiliates can be further limited
by contractual or regulatory restrictions or other agreements with regulatory
authorities restricting dividends and other payments, including regulatory
restrictions that are imposed as a matter of administrative policy.  If
insurance regulators determine that payment of a shareholder dividend or other
payments to an affiliate (such as payments under a tax sharing agreement,
payments for employee or other services, or payments pursuant to a surplus
note) would be hazardous to such insurance company's policyholders or
creditors, the regulators may block such payments that would otherwise be
permitted without prior approval.

     Historically, NAICO has played a significant role in the servicing of
debt and other obligations of Chandler USA through the payment of shareholder
dividends.  These obligations include $7.0 million of 8.75% senior debentures
due in 2014, $13.4 million of 9.75% junior subordinated debentures due in
2033, $7.2 million of floating rate junior subordinated debentures due in
2034 and the obligations under the sale and leaseback transaction discussed
previously.  To the extent that the restrictions discussed previously limit
NAICO's ability to pay shareholder dividends or other payments to Chandler
USA, Chandler USA's ability to satisfy the debt obligations may also be limited.

LITIGATION

     In October 1999, NAICO provided surety bonds for Gulsby Engineering, Inc.
("Gulsby") in connection with contracts between Gulf Liquids New River Project,
LLC ("Gulf Liquids") and Gulsby for the construction of two gas processing
plants in Louisiana.  During 2001, Gulsby became unable to pay various vendors
resulting in payments to vendors by NAICO totaling $20,182,499.  In August
2001, NAICO filed suit in federal court in Louisiana alleging that Gulf Liquids
had breached its obligations under the bonds by materially altering certain
contracts and that as a result, NAICO was exonerated on the bonds and should
recover the amounts paid to vendors.  In the fall of 2001, Gulsby and Bay
Limited, another contractor with whom Gulsby had entered into a joint venture
for the construction of other gas processing plants for Gulf Liquids, filed
lawsuits relating to those plants in Houston, Texas.  Gulf Liquids filed
original actions and counterclaims.  NAICO intervened in the Texas lawsuits
and, in addition, sued Williams Energy Marketing and Trading (which later
became Williams Power Company, Inc.) ("Williams") alleging fraud, breach of
contract, tortious interference with contractual relations, conspiracy and
alter ego.  These claims were asserted against both Gulf Liquids and Williams.
Gulf Liquids asserted counterclaims alleging breach of contract against NAICO
and requesting contractual and statutory damages ranging from $40 million to
$80 million.  The cases were consolidated for trial in the 215th Judicial
District Court in Harris County, Texas.  On August 1, 2006, the jury trial
concluded in Harris County, Texas, related to the construction of two gas
processing plants in Louisiana.  The amounts the jury found owing to NAICO
included approximately $20.2 million in actual damages and $70.0 million in
punitive damages.  See Note 4 of Notes to Consolidated Financial Statements
for a discussion of this jury verdict.

     During the third quarter of 2006, NAICO increased the estimated recovery
on the surety bond claims related to the construction of the two gas
processing plants which resulted in a decrease in losses and loss adjustment
expenses incurred of $4.7 million.  In addition, unpaid losses and loss
adjustment expenses decreased $22.7 million, reinsurance recoverable on
unpaid losses and loss adjustment expenses decreased $16.8 million, and
reinsurance recoverable on paid losses and loss adjustment expenses decreased
$1.2 million.  NAICO also recorded $6.6 million of interest income for its
estimate of prejudgment interest through December 31, 2006 and recorded an
additional $317,000 of prejudgment interest during the first quarter of 2007
including a recovery for a pre-verdict settlement with certain other parties.

     On January 28, 2008, the court entered a final judgment denying Gulf
Liquid's claims against NAICO and Gulsby, denying all of NAICO's claims
against Gulf Liquids and Williams, and entering judgment for Gulsby against
Gulf Liquids for $15,651,927 plus interest at 7.25% compounded annually from
January 28, 2008 until paid.  The court also ordered Gulf Liquids to pay
Gulsby's taxable court costs, estimated at $100,000.  Gulf Liquids has
appealed the judgment entered in favor of Gulsby.  NAICO has appealed to the
trial court's denial of its claims against Gulf Liquids and Williams and
seeks entry of judgment upon the jury verdicts for the amounts the jury found
should be awarded to NAICO.  Gulsby has also appealed the trial court's final
judgment, contending that judgment should be entered in its favor against Gulf
Liquids and Williams in accordance with the jury verdicts.

     In the fourth quarter of 2007, as a result of this final judgment, NAICO
decreased the estimated recovery on the surety bond claims related to the
construction of the two gas processing plants which resulted in an increase
in losses and loss adjustment expenses incurred of $1.8 million.  Unpaid
losses and loss adjustment expenses increased $12.7 million and reinsurance
recoverable on unpaid losses and loss adjustment expenses increased $10.9
million as of December 31, 2007 as a result of decreasing the estimated
recovery.  NAICO also decreased accrued interest income by $4.5 million for
its estimate of prejudgment interest income.

<PAGE>
                                                                     PAGE 15


ITEM 4T.  CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

     As of the end of the period covered by this report and pursuant to Rule
13a-15 of the Securities Exchange Act of 1934 (the "Exchange Act"), Chandler
USA's management, including the Chief Executive Officer and Chief Financial
Officer, conducted an evaluation of the effectiveness and design of Chandler
USA's disclosure controls and procedures (as that term is defined in Rules
13a-15(e) and 15d-15(e) of the Exchange Act).  Based upon that evaluation,
Chandler USA's Chief Executive Officer and Chief Financial Officer concluded,
as of the end of the period covered by this report, that Chandler USA's
disclosure controls and procedures were effective in recording, processing,
summarizing and reporting information required to be disclosed by Chandler
USA, within the time periods specified in the Securities and Exchange
Commission's rules and forms.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

     In addition and as of the end of the period covered by this report, there
have been no changes in internal control over financial reporting (as defined
in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter to
which this report relates that have materially affected or are reasonably
likely to materially affect the internal control over financial reporting.


PART II.                        OTHER INFORMATION
                                -----------------

Item 1.    LEGAL PROCEEDINGS
           -----------------
           Chandler USA and its subsidiaries are not parties to any material
           litigation other than as is routinely encountered in their
           respective business activities.  While the outcome of these matters
           cannot be predicted with certainty, Chandler USA does not expect
           these matters to have a material adverse effect on its financial
           condition, results of operations or cash flows.  See Note 4 of
           Notes to Interim Consolidated Financial Statements for a discussion
           of a favorable jury verdict in civil litigation regarding certain
           surety bond claims.

Item 1A.   RISK FACTORS
           ------------
           There have been no material changes from risk factors previously
           disclosed in our Annual Report on Form 10-K for the year ended
           December 31, 2008.

Item 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
           -----------------------------------------------------------
           None.

Item 3.    DEFAULTS UPON SENIOR SECURITIES
           -------------------------------
           None.

Item 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
           ---------------------------------------------------
           Effective May 12, 2009, Chandler USA's sole shareholder, Chandler
           Insurance, re-elected the following individuals to serve on
           Chandler USA's Board of Directors:

                 W. Brent LaGere               W. Scott Martin
                 Mark T. Paden                 Robert L. Rice
                 R. Patrick Gilmore            William Thomas Keele
                 Richard L. Evans

Item 5.    OTHER INFORMATION
           -----------------
           None.

Item 6.    EXHIBITS
           --------
           31.1 Rule 13a-14(a)/15d-14(a) Certifications.
           32.1 Section 1350 Certifications.

<PAGE>
                                                                     PAGE 16

                                   SIGNATURES
                                   ----------


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


Date:  May 12, 2009                CHANDLER (U.S.A.), INC.

                                   By: /s/ W. Brent LaGere
                                       --------------------------------------
                                       W. Brent LaGere
                                       Chairman of the Board and
                                       Chief Executive Officer
                                       (Principal Executive Officer)



                                   By: /s/ Mark C. Hart
                                       --------------------------------------
                                       Mark C. Hart
                                       Senior Vice President - Finance, Chief
                                       Financial Officer and Treasurer
                                       (Principal Accounting Officer)